Poll results: Why Obama has ratcheted up the populist rhetoric

The poll results are in on why President Obama has begun a ‘War on Wall Street.’ A majority of CW readers believe President Obama’s recent populist turn and harsh rhetoric directed toward Wall Street is a political stunt. And to the degree CW readers believe otherwise, they see the latest salvos as only a start. Only 5% of you believe Obama’s change of tack is the real deal. More people backed Wall Street and thought the recent proposals were off base than thought the proposals substantive and not politically motivated.

The poll results are below.

Marshall’s recent posts are spot on regarding the politics behind these moves.

Obama should not be going to bat for Bernanke like this – just as he should go the whole hog and and fire Geithner and Summers. Obama has belatedly realized after losing the New Jersey and Virginia gubernatorial races by a mile and the losing in Massachusetts – also by a mile relative to expectations – that his cottoning to Wall Street has cost his party far more than the Democrats ever imagined.

Now Obama looks like a fake when it comes to change. He has a huge credibility problem with his base – HUGE. So how does he overcome it? Going out there with Volcker and giving anti-banker speeches isn’t going to get it done. People don’t believe him. Backing Bernanke gives them reason not to believe him. It’s a HUGE tactical mistake. Obama is still playing games on the change issue – and the electorate will smell it out.

A third political party is emerging in America. Call it the I’m-Mad-As-Hell party.

It’s a mistake to see the Mad-As-Hell party as just a right-wing phenomenon – the so-called Tea Partiers now storming the gates of the Republican Party. There are plenty of mad-as-hellers on the left as well – furious at Wall Street, health insurers, pharmaceutical manufacturers, and establishment Democrats.

Mad-as-hellers don’t trust big government. But they don’t trust big business and Wall Street, either. They especially hate it when big government gets together with big business and Wall Street – while at the same time Main Street is in shambles and millions of people are losing their jobs and homes.

First it was TARP, the giant bank bailout that seems to have made Wall Street flush again — so flush the Street is now distributing giant bonuses as if the crash it brought on never happened.

Then came the stimulus package, replete with earmarked goodies for every corporation big enough to hire a team of Washington lobbyists.

And then it was health care, which to some people looked like a sweetheart deal between government and Big Pharma and big health insurers.

The Obama Administration has proved time and again that it is not “change you can believe in.” And for it to act as if somehow it has been on the right side of the issues all along without admitting point blank that it is changing tack reduces credibility.

Now, I know Goldman Sachs is unpopular these days. But, I have been saying all along that it is not just about Wall Street. Government sets the pre-conditions and ground rules which aligns Wall Street’s and Main Street’s incentives. In my July post “Forget about Goldman,” I said:

It’s the U.S. government we should be pointing fingers at. While Goldman is crying out thank you sir, may I have another as everyone piles on, the U.S. government, which often seems bought and paid for by Wall Street and is the one actually running things here, is getting off scot-free.

They are the ones who regulate the financial services industry. Government is the one which makes laws governing how financial services companies can and cannot operate. Government is also the one which can change the ground rules going forward to help prevent a recurrence of this sort of financial crisis in future.

As my good friend Marshall Auerback says the advantages firms like Goldman have are “symptomatic of the problem, but they are not the problem.” The problem is Government and its cozy relationship with the industry it is supposed to regulate and control. The government is captured by the financial services industry, plain and simple. This is why the global financial system is a shambles.

My argument now is largely the same. And I hope events over the past six months since I wrote that make you see the argument even stronger today. The Obama Administration wants you to think the financial crisis is Wall Street’s problem alone because many of the bad actors have been there. It has been 16 months since Lehman Brothers collapsed, three years since HSBC’s surprise credit writedowns began the subprime crisis. If Wall Street alone were the problem, by now we would already have seen a flurry of criminal prosecutions at a minimum. It is telling that we have not.

Edward Harrison is the founder of Credit Writedowns and a former career diplomat, investment banker and technology executive with over twenty five years of business experience. He has also been a regular economic and financial commentator in print and on television for the past decade. He speaks six languages and reads another five, skills he uses to provide a more global perspective. Edward holds an MBA in Finance from Columbia University and a BA in Economics from Dartmouth College.

Ed, I appreciate again your insight into the Obama Administration and what you (and others) think and feel is driving (or not driving) Obama & Co.’s decisions regarding financial regulations, bailouts, stimuli, sweetheart deals, etc. Perhaps Mr. Obama is really little more than an honors graduate of the “Chicago School of Politics,” who has simply used “hope and change” as a cynical tool to propel himself into the seat of Western power.

BUT JUST MAYBE…there really *is* something more to Mr. Obama: a man, perhaps, who does sincerely believe in hope and change, but is enough of a “smart cat” to know that at least initially, he may well need to work “with the system” — and coarsely enrich a few “fat cats” along the way — as inoculation to avoid getting a devastating reaction from the financial-services industry and those “bought-and-paid-for” members of Congress. Obama’s hypothetical acting like a “Mr. Squeaky-Clean” and a saintly moral crusader, in other words, may translate into precious little getting done for Obama, due to the legacy of “what’s-in-it-for-me” characters who still wield too much political power in Congress. (I’m not advocating unethical behavior, but just being a realist political observer here.)

It is POSSIBLE that Scott Brown’s election to the Senate may actually be “manna from heaven” for Obama, as this has created the sense of “emergency urgency” creating an “opportunity window” for him — the cattle prod he can now use on Congress (especially on the Democrats). Ironically, when Obama helped to likely prevent a Great Depression via his bailouts and stimuli, he created less of a sense of urgency in Congress to change “business as usual”: Blue-Dog Democrats still need to be “bought off” and all that. Even getting much of the bailouts and stimuli out the door — at a time that the financial sky seemed to be falling down — was only accomplished by ponying up a Christmas tree‒ful of pork for compliant Congressmembers.

In essence, Obama remains something of an enigma. However, what he may be is something of an “idealistic pragmatist”: a man possessing the dreamy idealism of a stereotypical Boomer, but also the gritty pragmatism of a stereotypical Generation-X’er. If so, it may yield much better efficacy than, say, Bill and Hillary fitfully (not) getting a universal healthcare program off the ground, despite a few souls needing to be somewhat greased by BO in the process.

—Marc

Gee Jay says 10 years ago

We are beginning to see the inability of our leaders to kick the problem of currency devaluation down the road for the next crew of “change artist” to solve. I am curious why Obama didn’t bring the economy down to the level needed for a re-start and put the whole mess on Bush from day one. Now, one-short-year later, he owns the fraudulent legacies of presidents-past plus the pent up angst you get after years of major crime waves being completely ignored. There is a reason though Obama keeps Paul Volcker on the bench. While under-secretary of the Treasury he engineered the dollar devaluation of 1971 for “tricky dick”. Today’s problems are insurmountable in that even with a 100% tax on everyone forever, there is absolutely no way we are paying back the incredible amount we have borrowed; At least in today’s dollars. And that is exactly what is in store for us. One hundred old bucks are going to become the new ten bucks, and if that doesn’t do, it will become the new dollar bill. Think of that when you suddenly see the best 82 year old “tool” in the shed coming out for another round of scorched earth policy.

Marc says 10 years ago

Gee Jay, thanks for your thoughtful response to the article. I agree that a US President’s ability to “kick the can down the road” in regards to America’s financial situation is becoming very difficult (maybe impossible) to do. I also agree with your perspective on where printing money like mad may lead us, although with the amount of private-sector credit writedowns still in the offing, we may have, I feel, a worse problem with deflation than inflation, at least for a goodly while.

However, in kind reference to what you further wrote: if Obama quickly and immediately brought down the US economy to a level suitable for a “re-start,” this may well mean, I respectfully feel, bringing it down to a level that would have allowed a Great Depression to start — an action that may have seriously obliterated political capital held by Obama for the entire time he is President, as well as creating possible riots in the streets and fearsome levels of global tensions. Ethically and practically, this possible “Austrian School” tactic may have highly negative behavioral consequences that would be extremely difficult for Obama to mop up, and be dangerous for America and the world as well. But yes, Obama certainly inherited much that wasn’t of his making that would be difficult for any President to deal with — and which may not be a can that can exactly be kicked to a successor President.

In the meantime, let’s hope that those 100-dollar bills don’t turn into one-dollar bills, value-wise, too soon, though! :-) Thanks again for the cogent comments.

Big Suprise 2012
A Third Party Emerges In The United States- When Obama’s first and last term ended the American public was fed up with anything that had to do with the elite- Wall Street, the big banks, Congress, the Senate, the Federal Reserve and both of the big parties. As a result a third party emerged which managed to get a large amount of seats in both houses. The party’s candidate for president got 25% of the votes in 2012 and won the election in 2016. The third party fundamentally changed the way politics is done in Washington and resulted in a large change in United States foreign policy. A lot of countries where left to deal with their problems alone. At the beginning, this policy caused havoc and even chaos in different countries around the world which suddenly where shocked by the shortage of American financial and military aid.

i think the problem is nt so much about changing hw washigton wrks but getting the pple back to wrk.The notion that he can do all at the same time seem to be failling.simply have a scale of prefernce.i dnt think u need an economic prof to tell u that,its common sense.enough of the rhetoric and party bickering.if he can deliver on one aspect,he can get pple to believe in him.i must also state that the lost in massachusets is obama’s bad.knwing hw important the seat is to the democrats shuld hve inspired him to wrk as hard as he did during his campaign bt rather he was in hawaii playing golf and as usuall sipping on some beer and probably sneeking a smoke.if biden is passive get him off and get the job done.nt to say i dnt believe he can deliver because of a truth he is smart bt he has got to stop making stupid mistakes.as 4 the lash on wall street,political stunt or not dserves it.